Question

Why is reciprocal reinsurance trading considered important by ceding insurers?

a.

Because it allows them to reduce their exposure to risk

b.

Because it allows them to increase their profits

c.

Because it allows them to improve their financial stability

d.

Both a and b

Answer: (d).Both a and b Explanation:Reciprocal reinsurance trading allows ceding insurers to reduce their exposure to risk and to increase their profits. By trading business with other insurers, they are able to spread the risk out and to reduce the potential losses.

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Q. Why is reciprocal reinsurance trading considered important by ceding insurers?

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